Stocks finish higher after Fed rate cut |
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Wed, 31 Oct 2007 21:03
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NEW YORK (AP) - Stocks bounded higher Wednesday after the Federal Reserve lowered interest rates as expected and said risks to the financial markets from the recent credit crisis have eased. The Dow Jones industrial average gained more than 130 points on the day.Stocks zigzagged in the minutes after the Fed's decision as some observers read comments from the central bank as indicating further rate reductions are less likely. However, investors appeared relieved that the Fed's comments about the inflation -- a perennial concern -- signaled the central bank was able to return to somewhat more parochial worries and focus less about upheaval in the credit markets than when it met last month.Investors, businesses and consumers alike would be getting cheaper access to cash because of the Fed's quarter-point rate cut, and that likely gave stocks a boost. The fed funds rate now stands at 4.50 percent. Last month, the Fed surprised the market with a larger-than-expected half-point cut in the funds rate.According to preliminary calculations, the Dow, which had dipped briefly into negative territory after the decision, rose 137.54, or 1 percent, to 13,930.01.Broader stock indicators advanced. The Standard & Poor's 500 index rose 18.35, or 1.20 percent, to 1,549.38, and the Nasdaq composite index rose 42.41, or 1.51 percent, to 2,859.12.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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